Good Monday to everyone. I hope you all had a fantastic weekend. We start off the week with a sort of jittery Monday as things are all over the board to start the week. Last week, we had another really successful week of trading and positions that finished on a solid note on Friday as we got involved with Sallie Mae (SLM) at 11.22. We also have positions in Entergis (ENTG) at 5.03 with a target of 5.18 and GFIG at $4.91 with a price target of $5.05.
Today, we will open with a new Buy Pick for the day. We will also look at a Play of the Week, have our daily Longterm Updates, $5 List Updates, and various other updates throughout the day. Additionally, since we are in the heart of earnings season, an Overnight Trade may make its way onto the table as well.
Stay tuned for all of that…
Buy Pick of the Day: Direxion Daily Financial Bull ETF (FAS)
Analysis: The fear of a second financial apocalypse coming due to put-back mortgage exposure has done most of its short term damage. Leading financials, especially Bank of America (BAC), Wells Fargo (WFC), and JPMorgan (JPM), were slammed last week by news that a probe was commencing into various companies that may have had faulty loan pools that offered mortgage-backed securities to investors. These investors were basically taken for a ride by financial companies, and now they have to pay.
The fear of major losses took all these stocks down last week, and it took leading financial ETFs with it. Direxion’s Financial Bull ETF (FAS) lost just under 10% in three days. The ETF has major holdings in all three of those companies, and it will .png)
continue to falter if they do poorly. The ETF, today, however, should start to look for a boost. For one, BAC, WFC, and JPM are all looking to open in the green. Fears have subsided, and CNBC among others has commented that these stocks look buyable at new levels.
Additionally, the financials of all things are actually looking positive while futures are temporarily looking down. I am in a bullish camp right now that believes the open in the red will only present a short term buying opportunity for investors. With earnings on their way, investors are not going to pass the opportunity to stick themselves into various positions. The earnings have much too good and should maintain this way for investors to pass on the opportunities.
Financials, of all sectors, may actually lead the way this morning. Citigroup (C), this morning, continued an earnings surprise streak for the financials as the company beat earnings expectations by a penny and commented that they saw less loan losses. With the current undervaluations, fears subsiding, and Citigroup’s earnings, FAS looks like a position that could soar this morning.
We are looking to make 2-3% and get out. Watch for a small dip to start the morning before things take hold.
Entry: We are looking for an entry of 21.45 – 21.65.
Exit: We are looking to exit for a 2-3% gain.
Stop Loss: 3% on bottom.
Good Investing,
David Ristau
